Member Info for romaron

I think I've answered my own question. Goldman's 5% is quite large but it is only 5% of 5% which is only a quarter of 1 per cent of the new company. Peanuts to Goldman. I doubt there'll be any late arrivals to spoil the deal so this is evidence (to me) that the caravan has moved on. I think the new company will do well but we are kinda locked in around this level. We are mere collateral. The winner is EIG.

True but it is larger than normal. The webcast would explain why there was more interest than normal, especially in the run up to Christmas which is normally quiet and Covid almost cancels out a firmer oil price. The UT trades have elements of a kinda Libor in that you need a daily rate for VWAP calculations etc. The good news is that it shows interest and volume wasn't too bad today. I'd imagine you can tell your broker that you want a trade done at the UT of the day to avoid them ripping you off by using tops and bottoms of the day. I'd say the 49 mio CFD's that Goldman purchased are a bigger statement. That needs to be drilled down. It must be offset against something (arbitraged) because an amount this size should have pushed the price much higher. Somebody on the other side was happy to accomodate.

We live in interesting times.

I am a PMO shareholder. I understand CFD's but there is something that has thrown me. If you look at the holding RNS from Goldman's yesterday and go to the foot of it you'll see the breakdown of voting rights. Take the first one (the largest) for example and it is for 32,116,294 3.47% of voting rights. No problem with that but what the hell is the Expiration date (I assume it's a typo for dates). The date of 16/05/2029 is so far ahead and beyond any prediction the craziest hedge fund would get involved in so what is it? I'm guessing at present that it's a technical legal hangover from a previous era (bit like a £1 stamp on a contract) and pretty meaningless. I'm not a train spotter but just want to clear it up. I might have something to say after.

I did find this but it hardly helps. "Only certain financial products have expiry dates – it varies from product to product. Spread bets, for example, always have a fixed expiry date. CFDs (contracts for difference) do not have an expiry date, unless they are on futures or digital 100s.*

Hi Dumbly - like me you probably found the reply from IR a little intense and things like 'deferred tax de-recognition' are just used to torture us (kinda impairment I think that may be written back if oil keeps rising). I look at horizons and use broad strokes so am easily pleased by things like "- No material cash tax expected to be paid on UK operation activities for the foreseeable future" and tax losses at 30 June 2020 $3,086.8m
My suggestion if your original query isn't satisfactorily answered here is to email EnQuest IR.

Re: your questions regarding tax losses. This from IR in September:
"I am not sure I fully understand your question, but will try and answer as best I can. Please come back to me if this is not what you meant. On tax losses, you are correct. They “live” in a legal entity and so can if that legal entity changes hands, the tax losses are still there and can be used to offset the cash profits that legal entity may make in the future. The impairments and tax loss de-recognition are really just accounting adjustments we are required to make due to the change in oil price assumptions we now use to calculate our future cash flows. The impairments represent the write-off of prior period cash capital expenditures. When the present value of future cash flows of an asset does not cover the remaining book value* held on a company’s balance sheet, you need to charge the P&L with that difference. This is effectively accelerated depreciation of an asset.
*Book value is the capital cost spent to develop the asset less the accumulated depreciation of that asset.
From a tax perspective, a company either pays tax or claims tax relief only on its cash profits or losses. As such, a company is able to claim tax credits when it spends the cash to develop an asset (capex) – so in that regard we have already claimed the tax credits for the capital expenditure we have incurred in the past. These tax credits get carried forward if you haven’t actually made a cash profit in the period until such time as you do make a cash profit. At this point you can start to offset your cash profits with prior period cash losses and eliminate any tax liability.
As we now forecast future cash flows to be lower due to lower oil price assumptions (which also drove the above impairments), we will also have lower future potential cash tax liabilities that would need to be offset by the utilisation of our accumulated tax losses. As such, we had to de-recognise from our accounts (from the balance sheet) an element of those accumulated tax losses as they just wont be used under the current price scenario."



If oil prices increase again in the future, we may be able to “write-back” some of the impairments and so increase our balance sheet value again AND we may be able to recognise additional tax losses that would offset higher expected future cash flows in such an oil price environment. As you go through a given year, if you earn cash profits over and above what you would have expected in that period, you can again utilise some of the overall accumulated tax losses to offset these, even if they were not “accounted for” on your balance sheet (because they were not part of the forecast/scenario used to prepare the relevant accounting entries).

I hope this helps."

L7 20.13 - I actually suggested you should listen to the webcast first ( 17 Dec 16.00)as otherwise you would only have my brief notes to go on. The reason I posted that is because I once had an angry poster pull a post apart of mine where I was merely repeating parts of what a ST journalist [Danny Forston] had written. It wasn't my post as such although I did actually agree with it and it saved me a lot of money. To my surprise shortly after the individual telephoned me asking if I could scan the article in its entirety and send it to him. I couldn't believe he was so lazy and dogmatic to jump to a conclusion on an incomplete post. He had a rant without the full report. I've no intention of posting transcripts. I wished to avoid a repetition.
You'll note that when I said LC was disparaging of EnQuest I added imo which I don't usually do. I think hitman's October find suggests she has changed the wording slightly and left EnQuest out but that looks like a whitewash to me. Maybe I shouldn't have included Cairn who are decidedly a smaller company and possibly in a lower league. I feel that LC is still bigging it up as an ex-Shell executive. Maybe I'm wrong but I did give an example from Jim Ratcliffe's book The Alchemist. He is not overly impressed by oil major executives or US funds and bondholders come to that.
I merely wanted to get a debate going and prefer to engage with people who actually watched and listened to the webcast.
The fact that you disagree with me doesn't necessarily make either of us right but it isn't my way to twist words but I do have opinions. I try not to correct posters or engage in areas that I am weak in (Accounts & balance sheets) but feel my contributions sometimes stimulate posts and I learn from others. I don't run my posts past a lawyer before pressing Post Message. You could always filter me if it upsets you.

I suppose it's a wee bit embarrassing that we may have a JV with Harbour (Bressay). She obviously held her nose and decided that Equinor is up to her high standards so she'll make an exception with EnQuest this time.

Spot on hitman. Respect. Did you see/listen to the 17th webcast as well? She is disparaging imo of EnQuest and Cairn in the 6 October webcast so my senses were correct. You've confirmed them. I doubt she's had a Damascene conversion since Oct 6. What a two faced individual. She obviously got some blow back on the Oct webcast. Harbour are welcome to her.

This message board is excellent.

That's not charitable chilting. You should be ashamed.

Excellent posts today and it shows the different interpretations of those who listened in. I'm convinced that Linda Cook is arrogance personified. She is gloating about eating OUR lunch https://www.youtube.com/watch?v=efHzGxEzDQA
That is a bit tongue in cheek but the class act imo is Phil Kirk.
Often these high level executives struggle to adapt to the lower league. Jim Ratcliffe was excoriating in his book about some senior BP executives when he took over Innovene. Two examples. a senior figure at BP said to Jim: "You don't understand, I don't report to people!" and on financial accuracy: "Well, in BP we were regularly out by a hundred million, and no one ever noticed!" TBF this was 2005.

damn, one of us is gonna have to listen again

Baillie Gifford 74,040,638 9.22
Amjad Bseisu & family 71,1405,331 8.90
Schroders 71,140,670 8.86
Deutsche Bank 49,665,425 6.19
Aberdeen Asset 41,492,150 5.17
Swedbank 39,763,791 4.95
Montanaro 29,902,500 3.73
EnQuest EBT 29,611,183 3.69
Norges 29,526,739 3.68

above. random but this was the list of substantial shareholders in EnQuest at 18 March 2015

HiL7 - glad you listened otherwise it makes our views incomplete and you do get a nuance listening to the whole webcast (too much for some). We will each draw different conclusions and we could both be wrong but I think it gives us a recent overview of the basin and similarities with EnQuest. Let's face it; there isn't much other news around on the NS.
It may not have been perfectly worded by me but there was an element of arrogance about the old "peer" group. "See yah, we're moving on". I was surprised that they'd left EnQuest out as I believe we were closer to Chrysaor than the others.
I disagree with you on sub-scale. It applied to buys and peers with them imo.
Good point about cancelling the BP acquisition. I don't think sub-scale though; I think they couldn't afford it and PMO at the same time.
I did reflect on the webcast and I'm not increasing my PMO. The winners here are Chrysaor and 5% of the new company shows what debt and poor management can do to a company [PMO]. Another factor in Chrysaor's favour is that they bought in at the right time (2014). The company behind Harbour made that decision and Phil Kirk and team have managed it well. Timing was fortuitous.
They appear to be copying us with SE Asia being a likely second basin and I think we may have the edge there.
Like you - some bits fleeting and some stuck. I don't think it was a waste of our time to listen in.
Interesting that they now rank themselves as the go-to-company for decomm in the NS. I thought that was us? I think Harbour will do well but I sensed they were a tad arrogant but they have done a pretty good job up till now. The NS is getting shaken up and I wonder if we'll get a surprise RNS early next year?
Just saw hitmans post 12.10. True to a point but tobacco, sugar, and betting companies somehow survive.

I'm not ignoring you Dumbly but others here are more qualified to advise you. All I would say is that the poorly run company PMO got itself into a mess with debt maturities and was bought for "a song" by Chrysaor who were attracted by a similar large tax credit along with some pretty good assets. Often companies with these tax credits don't survive. Prudent advance action by EnQuest management avoided the same fate as PMO. I believe we must be in negotiations because the NS basin is in such a state of flux. Whether they come to anything remains to be seen. Others who I listen to are very suspicious that the CEO is not buying stock. It could indicate that a deal could be being prepared. The only answer I can safely give you is that these tax credits are worth billions IF you make a profit.

"EnQuest's production efficiency and cost control skills are particularly valuable in the current macro environment where sellers of oil field assets need buyers who have the technical and operational capabilities essential for the subsequent safe and effective management of the assets, and who can do so cost effectively. EnQuest is managing its business in a manner which will allow it to withstand a prolonged period of low prices."

Exactly the same message that Harbour were trumpeting yesterday. We need to be in the same league that they have self-promoted themselves into. Spirit Energy anyone?

BTW, I took that quote from the Annual Report and Accounts 2014

Shame your post got hijacked by a message board grinch but your point is absolutely accurate "Brent has risen just over six and one half dollars in the past month given us an extra $402,000 Per day revenue ". I leave it to the number crunchers to get the exact benefit.
re: RCF options end October from IR
"Extend the existing loan facility for a short period (maturity would still be ahead of the bonds). Some of our existing lenders have informally approached us with this in mind.
Refinance the loan through a new short term (maturity still ahead of bonds). Similarly, informal talks suggest we have willing lenders in this regard too.
Enter into a prepay arrangement (a la OZ)"
I think there must also be a possibility that we will announce another large deal and we would take the opportunity to pay off the existing RCF to match our ever changing requirements.
Now, I would say the response from IR was pretty relaxed and confident and remember; oil was below $40 then, today it is $51.
Then there is the obsession with getting debt to zero. People should look at the real world. Things change and getting to zero on a date that was originally set around 7 years in the future is never easy and more likely to be missed than hit. It isn't a religious creed!

I really don't understand what the fuss is. Some on here are more interested in fear-mongering than admitting the actual position. We have almost reached one of our destinations and I suspect the company is already looking past 30 September 2021. The RCF is not a problem is and almost a rear-window job.

BTW - I think you're a bit low at $402,000 a day as I think you should really go back to end October.

Mouse trap this way >

Hi HM-the spread is so wide on the RB I usually wait until they post the valuation on my SIPP or ISA and sometimes that isn't until around 5.30. I'd like to see a close around 66.35. Harbour are saying that the average cost of debt for the new company will be under 5 percent and they see potential for an Investment Grade credit rating. We're not a million miles away from what they will achieve so to have our paper producing a yield to maturity of around 23 percent is something of a p*ss take.

Mouse trap this way >

Hi HM - log jam beginning to break up. HYN closing 66.594 its highest for some time but just as interesting to me was that all 4 Tullow bonds moved up as well. That isn't normal and the first time I've seen it happen. Something has changed.

Hi L7 - I suggest you listen to the webcast first.

Dividend pencilled in for Q4 2021. Couldn't give more details as legal restrictions.

Actually the replay will be better than Live. You can stop it and go back. Swedish investors should listen in too if they're allowed. I'd love to have HMHn's response.